WATER: A three-year moratorium on irrigation water-trading

Murray-Darling Basin agriculture, which produces about 40 per cent of Australia's food and fibre, is in major crisis, writes Patrick J. Byrne.

With record low water available for agriculture, stressed farmers with record debts are ready to sell off their water and leave the land.

Under the National Water Initiative part of National Competition Policy, permanent water-title has been separated from land-title and the water allowed to be traded. In theory, this is to allow the free trade of water from low to high-value uses, thereby letting the market decide who gets the water.

Irrigation water is now being bought by towns and cities and by managed investment schemes. Also, governments plan to buy 500 gigalitres under the Living Murray plan, and 3,500 gigalitres under the recently-passed federal water legislation, for environmental flows and buyback of existing licences.

In addition, the Victorian Government has just released a draft policy to take an additional 3,000 gigalitres every five years to flood the Murray red-gum forests, as well as taking water from the Goulburn system in central Victoria for Melbourne.

This would cut the annual 12,000 gigalitres diverted for agriculture and cities on average by at least 4,600 gigalitres, or 38 per cent.

This will push the price of irrigation so high that it will destroy much of the irrigation agriculture in the Murray-Darling Basin.

Ironically, even Professor Peter Cullen - who is a backer of these water reforms - admitted to his television audience that, when allocating water between sectors, "There are political judgments that have to be made. The choice between irrigation, rural towns, Adelaide and the environment is a value judgment which I think politicians are going to be making." (Difference of Opinion, ABC TV, February 19, 2007).

In other words, open free markets in water cannot properly allocate water among agriculture, cities and the environment. Governments have to allocate to those markets. And they have to wake up to the disaster they are creating by planning to take over one-third of the irrigation water in the basin out of productive use.

Before water-trading becomes an unmitigated disaster in the Murray-Darling Basin, there needs to be a three year moratorium placed on the trade in farmers' permanent water rights. Then there needs to be a long, open consultation among government, farmers and local governments across all the catchment areas of the basin to sort out the water crisis.